Recently, it’s been tough to stand by Zomedica (NYSEAMERICAN:ZOM), which specializes in veterinary testing and pharmaceutical products. The price performance of ZOM stock since mid-March hasn’t been stellar.
There have been speed bumps on the road to success for Zomedica. Some of the enthusiasm has worn off since the company first commercialized its Truforma pet diagnostics platform.
What the stakeholders should understand is that the commercialization of a new and innovative product doesn’t always happen smoothly. There can be problems along the way, especially as partnerships won’t necessarily work out as anticipated.
Sometimes problems happen in life and in business, but we don’t have to change our decision to work towards our goals. In Zomedica’s case, the company is only changing the direction it’s taking to get there.
ZOM Stock at a Glance
It would be an exaggeration to claim that every investor in Zomedica is disappointed. After all, ZOM stock cost less than 10 cents for much of 2020, and the share price is significantly higher than that today.
On the other hand, the stock’s price is much lower than its 52-week high of $2.91, which was achieved on Feb. 8. What could have caused this incredible rally to occur?
You can look for a company-specific catalyst, but there’s a simpler explanation. In early 2021, meme stock frenzy was in full effect as Reddit users precipitated short squeezes on certain stocks.
There’s a definite possibility that they targeted ZOM stock for a pump. These short squeezes don’t always last, though, and the share price declined sharply after topping out in February.
As of Sept. 9, the share price was hovering around 58 cents. For the remainder of 2021, the buyers should eye the $1 level as an important objective.
If ZOM stock breaks through $1 with high trading volume, then $1.40 could be reached surprisingly quickly.
Assessing the Assays
Zomedica’s main pet diagnostics platform, Truforma, provides immunoassays, diagnostic tests for various diseases. With that, veterinarians can make clinical decisions faster and more accurately.
One of the types of assays facilitated by Truforma is known as the canine free thyroxine (fT4) assay.
The purpose of this assay is to assist in the diagnosis of canine thyroid disease.
Another potential application of Truforma is to facilitate a particular adrenal assay known as canine endogenous ACTH (endogenous adrenocorticotropic hormone).
I told you all of that to help make sense of why Zomedica wasn’t able to commercialize Truforma as promptly as some stakeholders had anticipated.
Zomedica CEO Robert Cohen explained that there was “a delay due, in part, to the unexpected sale of our distribution partner and the lack of completion of the fT4 and ACTH assays from our development partner.”
It just goes to show, once again, that business partnerships don’t always pan out as expected.
Changing the Plan
In any case, Zomedica fully acknowledged that the market acceptance of Truforma was “adversely impacted by delays in the development of our fT4 and ACTH assays by our development partner.”
So, now what? How will the company recover from this?
I’m glad to report that Zomedica has a specific action plan to get the Truforma platform into veterinary clinics.
This plan, known as the Customer Appreciation Program, involves a written agreement in which customers agree to purchase assay cartridges for use on a Truforma Instrument.
So far, this plan seems to be working out well. In fact, Zomedica reported having secured 41 signed Instrument placement agreements, and installing 25 Truforma Instruments under the Customer Appreciation Program.
Moreover, Zomedica expects that the fT4 assay “will be available for commercial sale in the fall of 2021.” Plus, the company’s ACTH assay “will be available for commercial sale by the end of 2021.”
The Takeaway on ZOM Stock
Clearly, Zomedica isn’t just giving up on its commercialization plans for Truforma.
Persistence is crucial to any business’s survival and success. Hopefully, Zomedica’s persistence will pay off as the company strives to get Truforma into more veterinary clinics.
If that happens, then ZOM stock, which I give a “B” in my Portfolio Grader, could be poised for a breakout far beyond $1.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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